Money-laundering prosecution may continue without predicate conviction where material prima facie shows involvement with proceeds of crime.

Money-laundering prosecution under the Prevention of Money-Laundering Act, 2002 can proceed on a prima facie showing that the accused was involved in a process or activity connected with proceeds of crime, even if the predicate offence has not resulted in conviction. The Karnataka High Court treated the money-laundering offence and the predicate offence as distinct and separate, and held that the absence of conviction in the underlying offence was not, by itself, a bar to prosecution under section 3. On the material alleging laundering of property obtained through a corruption offence and derivation of pecuniary gain, the discharge under section 227 CrPC was found unsustainable and the discharge application was rejected.

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Issues: Whether the discharge of the accused under section 227 of the Code of Criminal Procedure, 1973 was justified on the ground that the accused in the predicate offence had been acquitted, and whether prosecution for money-laundering under the Prevention of Money-Laundering Act, 2002 could continue independently.

Analysis: The complaint contained direct allegations that the accused were involved in laundering property obtained through the offence under the Prevention of Corruption Act, 1988 and had derived pecuniary gain from such activity, which prima facie attracted section 3 of the Prevention of Money-Laundering Act, 2002. The offences under the Prevention of Money-Laundering Act, 2002 and the predicate offence were treated as distinct and separate. The existence of a conviction in the predicate offence was held not to be a necessary condition for sustaining prosecution under section 3, so long as the material showed involvement in a process or activity connected with proceeds of crime. The trial court's reliance on earlier decisions treating the predicate offence as a precondition was found unsustainable, and the material on record was held sufficient to proceed to trial.

Conclusion: The discharge order was set aside, and the application for discharge under section 227 of the Code of Criminal Procedure, 1973 was rejected.

Ratio Decidendi: Prosecution for money-laundering can be maintained on a prima facie showing of involvement with proceeds of crime, even where the predicate offence has not resulted in conviction, because the two offences are separate and distinct.

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